Leonard Pevar Co. v. Evans Products Co.

United States District Court for the District of Delaware · 1981 · Contracts

ContractsUCC 2-207battle of the formsconfirmatory memorandumstatute of fraudsmerchant formsmaterial alterationexpressly conditional acceptance

Facts

Pevar sought price quotations for plywood and spoke with Evans, which quoted the lowest price. Pevar claimed that during a telephone call on October 14, 1977, the parties entered into an oral contract; Evans admitted the call but denied accepting any order. Pevar then sent a written purchase order confirming its telephone order and specifying price, quantity, and shipping instructions, but saying nothing about warranties or remedies. Evans later sent an acknowledgment stating in boilerplate that acceptance was expressly conditional on Pevar's assent to its terms, including a disclaimer of most warranties and a limitation of the buyer's remedy if the goods were defective.

Issue

Whether the alleged oral agreement was barred by the statute of frauds, and whether Evans' acknowledgment made its warranty disclaimers and remedy limitations part of the parties' contract under UCC § 2-207. Also, if no oral agreement existed, whether a contract nevertheless arose from the parties' exchanged writings or conduct and what terms would govern.

Rule

Under UCC § 2-201(2), a written confirmation can satisfy the statute of frauds if the receiving party does not object within ten days; a writing that merely asserts additional terms does not necessarily give sufficient notice of objection to the existence of the contract. Under UCC § 2-207, when parties first make an oral agreement and later exchange confirmations, additional terms are proposals that become part of the contract only if they do not materially alter it. If there was no prior oral agreement, a writing expressly conditional on assent to additional or different terms does not create a contract under § 2-207(1) absent express assent, but the parties' conduct may still create a contract under § 2-207(3), whose terms consist of the writings' common terms plus Article 2 gap fillers.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Riverside Millwork, a cabinet manufacturer in Columbus, orally agreed by phone to buy $42,000 of maple veneer from Great Plains Timber Supply, a wood wholesaler in Omaha. The same day, Riverside sent a signed purchase order stating, "This confirms our phone order," listing quantity, price, and delivery dates; eight days later Great Plains sent back an acknowledgment adding a warranty disclaimer and remedy limitation but not denying that any deal had been made.

If Great Plains later argues that the oral agreement is unenforceable under the statute of frauds, what is the best answer?

Explanation. Under the majority opinion, a signed writing sent between merchants that confirms an alleged oral agreement can satisfy UCC § 2-201(2) if the recipient does not object within ten days. A response that merely adds boilerplate terms, such as disclaimers or remedy limits, does not necessarily provide sufficient notice objecting to the existence of the contract. So the oral agreement is not barred on statute-of-frauds grounds merely because the seller's acknowledgment asserted additional terms. (Derived from Leonard Pevar Co. v. Evans Products Co. (1981).)